The original trade or exiting the trade early?
The original trade was $13 with a max profit of $7 (or slightly more) on expiration of the May $100 calls. This represents a gain of 53% and over 100% annualized gain. Opportunity also existed to recoup some of the original investment by rewriting calls if Gilead crashed and the May $100 expire worthless, since the Jan 2016 $80 long calls would have time value.
Already the trade has value of over $4 profit per call spread. In about a 2 week time period.
Exit the whole spread? IE, sell the Jan 2016 $80 calls and buy back the May 2015 $100 calls? I likely would not even get $18, thus giving up $2 profit on my original $13 investment.
When it dropped to $86, in addition to getting lucky and buying 500 shares at $85.95, I wrote 10 call spreads, buying Jan 2016 $80 calls and selling May 2015 $100 calls for a cost of $13 (so profit of $7 if called away).
I thought maybe the May calls would expire worthless and I would write new calls, but now?
Well, $7 on $13 isn't bad for a few months holding time I guess.
I am not fooling myself although I did purchase some shares recently in the $1.39 to $1.65 range. After my worthless calls expire, I will probably just hold these shares a couple of years and see how the refi goes. I estimate I have about $40k in TC right now (25,000 shares).
Copper is not doing well. It should be still around $3 instead of dipping into the $2.70. I do not see a big price increase for TC if copper stays this low. Survive, yes, thrive, no.
I hope they are doing the best they can to milk these low oil prices. They should be able to shave a few million a year off of production costs with cheaper shipping, refining, and consumables. Any halfway decent CEO could with $50 oil vs $110 oil.
Why did all of the drillers run their finances in such a way (overleverage)? I guess it is like the investment banks in 2008, except we have no FED to bail out the drillers?
Fix that please...or mess up gold and show it as $4,000 an ounce.
Ok, here is my best *guess*.
Copper is weaker than I would want right now but we have reports of strong USA economy. A strong USA economy means China is doing better than they say it is because all we buy in the USA is Chinakrap.
Copper is $2.90. I would rather see it about $3. I think it needs to be over $3 for TC to trade over $2 by Jan 16 2015.
Gold is doing better than I thought since I secretly though there might be something to Goldman's $1050 prediction (not that they are prognosticators but rather they have an effect on markets with their opinions).
Sill, Gold is $1177. I think it needs to be over $1200 for TC to trade over $2 by Jan 16 2015.
I expect TC to trade in the range of $1.50 to $1.90 leading up to Jan 16. Most likely right after my options expire it will go to $2.30 on some news.
So there is my call. $1.50 to $1.90 by Jan 16 unless copper is above $3 and gold is above $1200.
Maybe. I see things like this go crazy low then shoot back up to crazy high. Gilead went to $64 this summer, then traded for $117.
More earnings than the GDP of a small country in one quarter.
Imagine if everything came under cost control of providers.
What a world.
Imagine if you will, two identical patients with Hep C. One has to take 6 pills a day with side effects. The other has only to take one pill. Feel cheated?
Fill the sleigh boys!